An economic downturn is a period when the economy experiences a decline in activity, often measured by a decrease in gross domestic product (GDP). During this time, businesses may struggle, leading to lower profits, reduced investment, and potential layoffs. Consumers often cut back on spending, which can further slow economic growth. These downturns can be caused by various factors, including high inflation, rising interest rates, or external shocks like a global pandemic. Governments and central banks may respond with measures such as stimulus packages or interest rate cuts to help stabilize the economy and encourage recovery.